MAY 1996
United Spring
Wheat
Processors Co-op Organized
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Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.
"The intent is to make membership available to spring wheat growers who are committed to developing a large-scale, value-added project that has the greatest potential for success," says Mike Warner, who heads the USWP steering committee.
A Hillsboro, ND farmer, Warner serves on the board of directors of American Crystal Sugar Co., and was involved in the merger of the Red River Valley Sugarbeet Co-op with American Crystal Sugar 20 years ago. He also helped form the Dakota Growers Pasta Co-op in Carrington, ND, and the new Golden Growers (ProGold) corn processing co-op near Wahpeton, ND.
If even 10 percent of some 30,000 spring wheat growers in North Dakota, Minnesota, South Dakota, and Montana join USWP, the scale of the project in terms of membership would be even larger than that of American Crystal, the Dakota Growers Pasta Co., or ProGold.
Because of the number and geographical distribution of growers who may be involved, as well as the diverse value-added opportunities for spring wheat, USWP will pursue a business development process different from what previous value-added cooperatives have used.
"Our first step is to build a base of capital and membership. With this strategy, USWP will establish credibility and secure customers before an actual plant is built or purchased," says Warner. "It makes sense to identify the demand for whatever USWP produces and have the buyers in hand, rather than build a plant and then try to sell the product."
USWP's development strategy was selected by some of the region's most experienced growers involved with value-added cooperatives. The steering committee for USWP involves more than three dozen wheat and value-added leaders in the region. In addition to Warner, other key committee members include Jack Dalrymple, Casselton, ND, Dakota Growers Pasta chairman; Frank Dilse, Scranton, ND, member of the Western Dakota Pork Cooperative and Dakota Growers Pasta; value-added promoter Roger Gussiaas, Carrington, ND; Pat Benedict, Sabin, MN, chairman of ProGold; Francis Buschette, Renville, MN vice chairman of Val-Ad-Co; and Eugene Nicholas, Cando, ND, Dakota Growers Pasta board member and N.D. House Ag Committee Chair.
This spring, wheat growers are being invited to become members of USWP by investing $5,000 each into the co-op. Those who decide to join USWP will make an initial $200 risk capital investment for organization of the cooperative, which represents a future membership share. Growers will become active members of the cooperative once the balance of each grower's $5,000 membership investment is collected next fall.
After growers have had the opportunity to examine a detailed prospectus each grower's $4,800 investment will be placed in an escrow account. The fund will remain until individual members approve USWP's value-added investment proposal. Interest earned from the investment pool will be used to finance USWP's business development process.
"By working together to provide the capital needed, USWP investors will create the best potential for establishing a profitable value-added business that will have the greatest economic impact on the largest number of wheat bushels," says Warner.
Chronology for United Spring
Wheat Processors in 1996
March 1 -- Organizational framework for USWP
established
March 7 -- Public announcement of USWP
March 11-13 -- Briefing about the project to area
lenders
March 13 - April 15 -- Grower meetings in which an
initial $200 membership investment will be requested from
each grower.
April 30 -- Deadline for $200 initial membership
investment
August-September -- Distribution of
prospectus/disclosure documents
Fall -- Collect remaining $4,800 investment from
each member
Once the membership drive is complete, the cooperative will hire executive management, complete market analysis, identify target customers, develop a sound business plan, present the proposal to members, and finally, execute the plan. Organizers have set a deadline of Sept. 30, 1999, to bring a spring wheat processing project forward. If the business proposal is unacceptable to members, $4,800 of each grower's individual investment will be refunded. USWP organizers say these strategies will maximize the co-op's chance for success.